Short Takes

Prompted by slow economic growth, factory closures, and worker layoffs, the PRC government recently announced plans to assist job-seeking college graduates, a demographic that is expected to grow by more than 6 million in 2009. According to Xinhua News Agency, the government will offer job training, exemptions at state-owned enterprises for job application fees, student loan-debt forgiveness for graduates who work in rural areas or join the military, and preferential loans for companies that hire new graduates and for graduates who start their own businesses. The State Council is also encouraging all levels of government to prioritize employment of laidoff and migrant workers.

The State Council has asked all cities—except Beijing, Chongqing, Shanghai, and Tianjin—to suspend residential permit (hukou) requirements for college graduates. The move is aimed at making it easier for graduates to find work. Shanghai and Shenzhen may revise their hukou systems to make it easier for long-term residents to gain resident permits.

To further slow the pace of layoffs, the State Council in February announced new requirements for enterprises that wish to reduce their workforce by more than 10 percent or by more than 20 workers. Enterprises meeting this layoff threshold must now notify all staff or report workforce-reduction plans to the local human resources and social security bureau at least 30 days before they take effect.

Total US-China trade reached $409.3 billion in 2008, up 5.8 percent over 2007. US exports to China hit $71.5 billion in 2008, up 9.5 percent from 2007, but significantly slower than in 2006 and 2007, when they grew 32.0 percent and 18.1 percent, respectively. Last year, imports rose 5.1 percent to $337.8 billion, or 7.6 percentage points less than in 2007. China now accounts for one-third of the US trade deficit.

In other noteworthy trade developments, Sino-African trade hit $106.8 billion in 2008. On average, trade between China and Africa has grown 30 percent annually since 2000, according to the PRC Ministry of Commerce. Sino-EU trade dropped 4.3 percent to $32.7 billion.

US Secretary of State Hillary Clinton capped her first overseas visit to Asia with meetings in Beijing on February 21-22. She met with senior PRC leaders, including PRC President Hu Jintao.

During meetings, Clinton assured China's leadership of the importance of the bilateral relationship to the Obama administration. She also discussed the structure for a new bilateral dialogue, laid the groundwork for the April G-20 meetings in London, and explored opportunities for cooperation on environ- mental issues and climate change, which could be a central part of the secretary's China initiative.

China's worst drought in 50 years began in November 2008. The drought has affected 161 million mu (25.5 million acres) and more than 40 percent of China's wheat land, seriously damaging crops in eight northern and central provinces.

In early February, the central government declared a state of emergency and earmarked ¥400 million ($58.5 million) in drought relief to local governments. It also sought to minimize the drought's impact by subsidizing farmers' purchases of irrigation equipment, deploying soldiers to assist with irrigation, and seeding clouds with silver iodide to artificially trigger rainfall. Despite winter harvest losses, Vice Minister of Agriculture Wei Chao asserted that China had enough grain reserves to keep grain prices relatively stable.

In January, China's domestic auto sales surpassed US auto sales for the first time. Despite a 14 percent drop in sales, China still sold 736,000 autos, according to the China Association of Automobile Manufacturers. Meanwhile, US sales plummeted 37 percent to 657,000 autos. China's auto market grew 6.7 percent in 2008, contrasting sharply with the 18 percent contraction of the US auto market last year.

To bolster transport and related sectors, the PRC government has announced several stimulus measures. The PRC Ministry of Finance recently confirmed the launch of trial programs that will subsidize government purchases of energy-saving vehicles. Moreover, Xinhua News Agency recently reported that China's farmers will receive ¥5 billion ($731 million) in subsidies to purchase minibuses with engine sizes of 1.3 liters or less. The PRC Ministry of Railways plans to spend roughly ¥1.5 trillion ($219 billion) in the next three years on railway infrastructure, and the ministry has already ordered 3.25 million tons of steel— 72.9 percent more than it bought in 2008. The State Council also announced a stimulus plan for the shipbuilding industry. (For more information on China's stimulus spending projects, see China Market Intelligence.)

In mid-February, AVIC I Commercial Aircraft Co., Ltd. signed contracts with four other factories to begin mass production of the ARJ21-700, the country's first domestically developed regional jet. According to AVIC's website, the jet has a standard range of 2,225 km.